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Valaris (VAL)
NYSE:VAL
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Valaris (VAL) AI Stock Analysis

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VA

Valaris

(NYSE:VAL)

Rating:78Outperform
Price Target:
$48.00
▲(9.34%Upside)
Valaris is on a strong recovery path, driven by robust financial performance, positive earnings call guidance, and strategic corporate actions. While technical analysis shows a neutral trend, the overall fundamentals are solid, positioning Valaris well in its industry.

Valaris (VAL) vs. SPDR S&P 500 ETF (SPY)

Valaris Business Overview & Revenue Model

Company DescriptionValaris Limited provides offshore contract drilling services to the international oil and gas industry. The company owns an offshore drilling rig fleet of 56 rigs, which include 11 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and 40 jackup rigs. It serves international, government-owned, and independent oil and gas companies in the Gulf of Mexico, the North Sea, the Middle East, West Africa, Australia, and Southeast Asia. The company was incorporated in 2009 and is based in Hamilton, Bermuda.
How the Company Makes MoneyValaris generates revenue primarily through the leasing of its offshore drilling rigs to oil and gas companies. These contracts can vary in duration and terms, often depending on the complexity of the drilling operation and the specific needs of the client. The company also earns money by providing integrated services that support drilling operations, including drilling management and engineering services. Valaris's earnings are influenced by factors such as global energy demand, oil and gas prices, and technological advancements in drilling practices. Strategic partnerships with major energy corporations and long-term contracts provide stability and predictability to its revenue streams.

Valaris Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 35.87%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
Valaris reported a strong financial performance with significant contract backlog additions and safety achievements. However, macroeconomic uncertainties and potential idle time for rigs present challenges. The overall sentiment is cautiously optimistic, with a focus on securing future contracts and managing fleet efficiency.
Q1-2025 Updates
Positive Updates
Strong Financial Performance
Valaris reported total revenues of $621 million, up from $584 million in the prior quarter, and adjusted EBITDA of $181 million, up from $142 million in the prior quarter. Adjusted free cash flow was $74 million.
Significant Contract Backlog Increase
Since the last call, Valaris has added more than $1 billion in new contract backlog, including a $350 million contract for the drill ship Valaris DS-10. The total backlog increased to more than $4.2 billion, a nearly 20% increase from the previously reported $3.6 billion.
Safety Awards and Milestones
Valaris received the 2024 Best Safety Performance Award for jackup rigs from the IADC North Sea chapter. Rigs VALARIS 121, 144, and Mad Dog achieved significant safety milestones, including two years without a recordable incident for VALARIS 121.
Successful Jackup Contract Extensions
Five jackups chartered to ARO Drilling joint venture were extended for five-year terms, securing their operations into 2030.
Positive Market Outlook
Despite macroeconomic uncertainties, Valaris remains optimistic about offshore production's role in meeting global energy needs. The company is actively engaged in discussions for additional contracting opportunities in 2026 and beyond.
Negative Updates
Macroeconomic Uncertainty
Proposed tariffs on international trade and OPEC Plus production cuts have introduced new uncertainties for the global economy and the offshore drilling industry.
Idle Rig Concerns
Valaris DS-12 completed its contract offshore Egypt in March and is currently idle in Las Palmas, with efforts to secure its next contract ongoing. Other floaters are also expected to complete contracts later this year, with potential idle time.
Challenges in the Jack-up Market
Global jackup fleet utilization declined from 94% in early 2024 to 90% at the end of the first quarter, leading to downward pressure on day rates in certain benign environment regions.
Increased Competition in the North Sea
An uptick in available units in the North Sea is expected to increase competition for upcoming work, potentially resulting in increased idle time across parts of the fleet.
Company Guidance
During the Valaris First Quarter 2025 Results Conference Call, the company provided robust guidance that highlighted their operational and financial performance. Valaris reported a revenue efficiency of 96% and an adjusted EBITDA of $181 million for the first quarter, up from $142 million in the previous quarter. The company also generated $74 million in adjusted free cash flow. Valaris emphasized their commercial success by securing over $1 billion in new contract backlog, including significant contracts for drill ships in West Africa, and extensions for jackups in the Middle East and other regions. Despite macroeconomic uncertainties, Valaris remains confident in its ability to secure more contracts, leveraging its high-specification fleet to meet global energy demands. The company also received recognition for its safety performance, with several rigs achieving notable safety milestones. Looking ahead, Valaris narrowed its full-year 2025 adjusted EBITDA guidance to a range of $500 million to $560 million, maintaining a focus on operational excellence and prudent fleet management.

Valaris Financial Statement Overview

Summary
Valaris has demonstrated a strong financial recovery with significant improvements in margins, revenue growth, and profitability. The company has a positive net profit margin, robust EBIT and EBITDA margins, and stable financial leverage, indicating a strong financial turnaround.
Income Statement
85
Very Positive
Valaris has shown a strong recovery with a significant improvement in its margins and revenue growth trajectory over the recent periods. The Gross Profit Margin has notably increased to 42.58% TTM, and the Net Profit Margin has turned positive at 12.61% TTM from a negative base in the past. Revenue growth is also robust at 5.48% TTM, indicating solid market demand. The EBIT and EBITDA margins have improved to 18.97% and 25.91% TTM respectively, reflecting better operational efficiencies. Overall, the income statement reflects a strong financial turnaround and growing profitability.
Balance Sheet
78
Positive
The balance sheet of Valaris shows a stable financial position with a manageable Debt-to-Equity Ratio of 0.49 TTM, indicating moderate leverage. The Return on Equity has improved significantly to 14.01% TTM, showcasing efficient use of equity capital. The Equity Ratio stands at 50.42% TTM, reflecting a solid equity base relative to total assets. Although the debt level has increased, the company has maintained equity growth, supporting financial stability.
Cash Flow
72
Positive
Valaris has demonstrated improvement in its cash flow management, with a positive Free Cash Flow of $81.54 million TTM, which is a notable turnaround from previous deficits. The Operating Cash Flow to Net Income Ratio is 1.56 TTM, indicating strong cash generation relative to net income. However, the Free Cash Flow Growth Rate is not applicable due to previous negative values, but the positive shift is a favorable sign of improving cash flow health.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.06B2.36B1.78B1.60B1.23B1.43B
Gross Profit2.19B479.60M139.50M128.10M-66.00M-584.00M
EBITDA-1.74B577.10M254.20M361.40M-4.18B-4.26B
Net Income-1.47B373.40M865.40M176.50M-4.49B-4.86B
Balance Sheet
Total Assets16.93B4.42B4.32B2.86B2.61B12.87B
Cash, Cash Equivalents and Short-Term Investments97.20M368.20M620.50M724.10M608.70M325.80M
Total Debt6.10B1.17B1.16B551.80M545.30M15.70M
Total Liabilities7.62B2.18B2.33B1.56B1.55B8.50B
Stockholders Equity9.31B2.24B1.99B1.30B1.06B4.37B
Cash Flow
Free Cash Flow67.50M-99.70M-428.60M-79.50M-124.90M-345.50M
Operating Cash Flow1.69B355.40M267.50M127.50M-66.00M-251.70M
Investing Cash Flow-2.04B-452.30M-665.80M-16.70M-3.70M-42.00M
Financing Cash Flow-191.80M-158.30M285.50M-6.40M388.70M522.20M

Valaris Technical Analysis

Technical Analysis Sentiment
Positive
Last Price43.90
Price Trends
50DMA
39.06
Positive
100DMA
38.58
Positive
200DMA
43.75
Positive
Market Momentum
MACD
0.99
Positive
RSI
58.44
Neutral
STOCH
26.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VAL, the sentiment is Positive. The current price of 43.9 is above the 20-day moving average (MA) of 43.44, above the 50-day MA of 39.06, and above the 200-day MA of 43.75, indicating a bullish trend. The MACD of 0.99 indicates Positive momentum. The RSI at 58.44 is Neutral, neither overbought nor oversold. The STOCH value of 26.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VAL.

Valaris Peers Comparison

Overall Rating
UnderperformOutperform
Sector (44)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
VAVAL
78
Outperform
$3.12B10.3114.66%30.82%-62.91%
TDTDW
77
Outperform
$2.32B13.8116.24%19.34%31.76%
71
Outperform
$1.69B5.1012.75%-15.60%32.51%
HPHP
69
Neutral
$1.53B7.027.57%6.60%12.23%-37.06%
59
Neutral
$2.35B-24.93%5.40%5.82%-481.39%
RIRIG
59
Neutral
$2.28B-6.65%24.47%-55.45%
44
Neutral
AU$1.36B-6.71-23.02%7.01%5.33%-26.92%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VAL
Valaris
43.90
-29.83
-40.46%
HP
Helmerich & Payne
15.92
-18.63
-53.92%
PTEN
Patterson-UTI
6.10
-3.61
-37.18%
TDW
Tidewater
47.70
-47.56
-49.93%
RIG
Transocean
2.66
-2.52
-48.65%
SDRL
Seadrill Limited
27.24
-24.60
-47.45%

Valaris Corporate Events

Executive/Board ChangesShareholder Meetings
Valaris Holds 2025 Annual Shareholder Meeting in Bermuda
Positive
Jun 13, 2025

Valaris Limited held its 2025 Annual General Meeting of Shareholders in Bermuda on June 12, 2025, with 82.41% of shares present and voting. Key decisions included the election of directors, approval of executive compensation, and the appointment of KPMG LLP as the independent registered public accounting firm, reflecting strong shareholder engagement and support for the company’s governance and financial oversight strategies.

The most recent analyst rating on (VAL) stock is a Sell with a $40.00 price target. To see the full list of analyst forecasts on Valaris stock, see the VAL Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Valaris Increases Contract Backlog to $4.2 Billion
Positive
Apr 30, 2025

Valaris Limited, a company in the offshore drilling industry, reported an increase in its contract backlog to approximately $4.2 billion as of April 30, 2025, up from $3.6 billion in February 2025. The company secured new contracts and extensions, including a two-year contract for drillship VALARIS DS-10 offshore West Africa and a five-year extension for jackups leased to ARO Drilling in Saudi Arabia. Additionally, Valaris sold three semisubmersibles for recycling, generating $10 million in sales proceeds.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 25, 2025